Time as an Endogenous Random Variable Smoothly Embedded into Preference Manifold

Abstract

A general equilibrium model has been constructed in a stochastic endogenous growth
economy driven by an Ito-Levy diffusion process. The minimum time to “economic maturity” for
an underdeveloped economy has been computed both in the preference manifold of the modified
Ramsey fashion and in that of the modified Radner fashion with its support, i.e., fiscal policies and
savings strategy, endogenously determined. Furthermore, the effects of different information
structures to the endogenous time have been thoroughly investigated, and local sensitivity
analyses of optimal consumption per capita with respect to the initial level of capital stock per
capita have been smoothly incorporated into the current macroeconomic model.

Item Type:

MPRA Paper

Original Title:

Time as an Endogenous Random Variable Smoothly Embedded into Preference Manifold

English Title:

Time as an Endogenous Random Variable Smoothly Embedded into Preference Manifold